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Doomsday for America’s top brand Hostess

It came with a shock to most Americans when Hostess Brands declared bankruptcy in 2012 and announced that it was going out of business. Here’s revisiting what happened when the top brand – who produced iconic American products like Twinkies and Wonder Bread – filed a motion with the U. S. Bankruptcy Court seeking permission to close down and sell its assets. Such drastic action was taken after expensive labour disputes and meant that about 18,500 Americans would be unemployed. However, it was not long after that a judge ordered the company into mediation with union workers. Amongst all these confusing chaos, Harlan Platt, professor of Finance at Northeastern University, talked about what he thought this meant for the company and America.
Platt said that, while it cannot be assumed to be so, there was still a chance for things to get cleared out and a deal to be reached. He found the situation similar to what had happened with Eastern Airlines in the year 1991. Assessing the situation, Platt suggested that a possible reason for Hostess’ bankruptcy is the inability to adapt its rules according to the times and necessities. For example, he notes, the same Hostess truck was not allowed transport bread and cake together which meant an unnecessary extra expense of multiple trucks and drivers to drive them. The huge loss of labour that was impending, he said, was going to be a setback not just for the individuals but the economy as a whole.
While people are definitely shocked by the brand’s move, what worried them more was the future availability of their favourite food items like Twinkies. Analysing the popularity of these amongst the people, Platt said that they are most likely to be bought by another company restart production. If they’d be as good as the old ones were for the people to judge.
N Malavika Mohan